January 9, 2007

Building Wealth is More Than Flipping Houses.

Building Wealth - Passive Income - Retiring Early

Although most posts here so far have concentrated on my house flipping venture, I wanted to let you know that this site is about more than that. In addition to making money by flipping or rehabing houses, I want this site to be about building wealth in general - what to do with the money you have now to maximize its returns and what to do with all the money you will make in the future.

This includes the magic of compound interest, taking advantage of tax laws and retirement plans to maximize returns, other money making ventures (from sports gambling to loans to blogging online for money), creating passive income, and little things you can do to make a little bit more here and there.

Although many sites focus on how to make what you have get you more, my philosophy is to always be building your empire. A popular analogy explains it very well. Imagine all the money you have is water in a bathtub. All the expenses you have are holes in the tub letting water (money) out. When ever you want something new you have three basic options: first, don't get it because you don't have enough water in the tub; second, plug up or slow some of the other leaks (reduce some expenses) so you have enough water left over to get what you want; or third, fill the tub with more water. I subscribe to the third philosophy, so I'm always trying to fill my tub with more water (while always monitoring the leaks).

Hopefully this isn't too Steve Pavlina for you. I'm all for personal development, but don't want to come off like a hack while trying to get you on track to building your empire.

So, if you want to make more money, make more money with the money you've made, and keep filling that "tub" with "water," stay tuned!

Building Our Empire

January 4, 2007

Flipping Houses - Kitchens

Building Wealth - Flipping Houses - Real Estate Development

In building wealth and retiring early, we are flipping houses. I'm going to run through the typical kitchen remodeling ideas you can make to a kitchen to maximize its value while minimizing your costs. Here are a couple of pictures of the kitchen in its current state for your viewing pleasure.

The first thing that should jump out is the darkness of the kitchen. The dark paint, dark wood, and dark tile do not allow any natural light to reflect off the walls. So, job number one - light paint on the walls, white trim, and white outlets/covers. This will brighten the kitchen up, make it look bigger, and make it more inviting. And this is a very easy DIY home improvement.

The second thing I immediately notice is the appliances. First, there is no microwave - very bad. Second, the other appliances are mismatched; the diswasher is black and stainless steel, and the refrigerator and stove are white. Job number two - stainless steel appliances in the kitchen. It will give an updated, modern look, and provide a good contrast with the brightness of the kitchen.

The third thing I notice is the countertop - old, uninviting formica. Although this house may not be in the price range for granite ($70-$80/sq. ft), there has got to be another option. We are thinking concrete ($50-$60/sq. ft). It is contemporary, modern, and looks great.

Finally, and this is a small touch, is the hardware on the cabinets. There is no sense in modernizing this kitchen only to leave the kitchen hardware with a gold, old-style finish. We'll go online and find some hardware that fits better with our overall theme of the house (young, vibrant, contemporary).

Hopefully this will help you lay out your house flipping dreams (or keep progress on ours - whichever you wish). Either way, next time I'll outline our plan for three of the four bedrooms (one needs its own plan), as I work my through all the changes we are making to the house.

How to Flip Houses Successfully

January 2, 2007

Our First Property Flip

Building Wealth - Real Estate Development

Although it is easy to talk about finding the perfect home, unless you have seen one it may be hard to visualize. Do not worry, I am here to show you the way to house flipping success, building wealth, and real estate development. Below are several pictures of the house I have picked up to flip. Now, this is a long term flip, doing many of the repairs as you go. Hopefully it can be done in a year or two.

Interior of a great house flip example.

First a picture of the exterior. Immediately you can see from the picture it is a nice house. It has a good look to it, it is in a relatively good neighborhood and it is in good condition. But a closer look reveals some chipping paint, warped and badly working fence doors, gaudy evergreen bushes, and a bad driveway. These are perfect ingredients for a successful house flip(the driveway quality is not desireable, but you have to take what you can get. Overall, a very good start.

Interior of a great house flip example.
The overall details on the interior are as follows: four bedrooms; two 1/2 bath; two story house (no basement); two car garage; fenced in backyard; fireplace; lower level has hardwood floors and tile; and the upstairs level (where all the bedrooms are) is carpet. In the coming posts I'll break down the problems/opportunities in each room (with pictures) and then move on to the fun stuff - where to start, where to go, and how to make money flipping houses. It really is not hard.

What a house to flip! Watch the transformation from dud to stud! And pay close attention to the garage floors, we are putting in epoxy garage floors.

Flipping Houses

January 1, 2007

How to Find a House to Flip

Building Wealth - Passive Income - Real Estate Development

One way to build wealth, build passive income and retire early is to flip houses. Finding a property to flip is not difficult. All it takes is knowing what to look for, knowing what to avoid, and keeping emotions out of the equation. To show you how easy it is, I'm going to let you in on a property I recently purchased to flip. Before I do that, though, I should probably outline my house flipping philosophy.

First, I am in this game to make a lot of money. I know there is tremendous wealth in flipping houses, and I am eager to get some of it. It doesn't take rocket science to understand the art of flipping - find an undervalued, underappreciated house, fix it and add some cosmetic touches, and sell it for a profit. Easy as pie.

Second. In spite of my first philosophical rule, I am not in this to flame out or go bankrupt. I want to earn a lot of money, but I want to do it over time, maximizing profit and minimizing risk. This means flipping one house at a time, over the course of one to two years, until enough cash is built up to become more agressive. Although this probably isn't the most popular track, and isn't the method glamourized on TV, it works.

Finding a House to Flip - Rule #1

Your search for houses should be limited to the following: 3-4 bedroom, 2-3 bath houses with a garage. There are more of these houses than any other on the market, and there are more buyers for these houses than any other. This is good because it will make it easier to find a fixer-upper and when you want to sell it you will have a lot of willing buyers.

Finding a House to Flip - Rule #2

No major repairs!! This is where people get in big trouble. Don't go for the house (especially when starting out) that requires walls to be moved, studs to be exposed, or any other major renovation. You should stick to the flipping houses money makers - new paint (interior and exterior), new carpet, new countertops (kitchen and bathroom), new tile, landscaping, and new appliances. All of these can be done relatively easily and relatively inexpensively and return big bucks. Successful house flippers don't go for broke all the time!

Finding a House to Flip - Rule #3

Keep emotions out of it! It is important to remember that you are not looking for your dream home (that comes in at about home 4-6). You want something that is appealing, needs fixing up, and that others will buy. When you are through, this flip should look like the perfect home for the perfect couple. You aren't going to get to customize it the way you want anyway, so look for properties that maximize profit, not that fit your eye.

Using these three rules, you should be able to find something you can successfully fix and flip, begin building your real estate empire, and retire early!

Fixing and Flipping Houses